Finance Division Withdraws Decision to Sell Majority Stake in PCGC to UK

The Ministry of Finance has retracted its decision to sell 51 percent of its stake in the Pakistan Credit Guarantee Company (PCGC) to a UK-based firm.

The withdrawal comes in response to questions raised after the Economic Coordination Committee (ECC) had approved the conversion of the 12-year old endowment program into an equity holding.

The ECC had initially approved transactions for a majority share buyout through Karandaaz Pakistan, a loan-giving entity owned by the Bill Gates Melinda Foundation, and the Foreign Commonwealth and Development Office (FCDO) based in the UK.


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The initial move to sell the stake in the PCGC has raised doubts about how the public sector company could be sold without any due diligence.

In response to the mounting reservations on behalf of prominent government officials, the ECC-approved items were presented before a federal cabinet meeting in which the Secretary Cabinet, Sardar Ahmad Nawaz Sukhera, declared the ministry’s decision to withdraw from the deal.

A report quoted a source saying that the Minister for Finance, Dr. Abdul Hafeez Sheikh, had informed the cabinet about the decision beforehand.

The Minister for Information, Senator Syed Shibli Faraz, briefed a presser regarding the cabinet’s decision.

“I cannot give a reply”, was his official response to the query by the ECC.

The ECC had initially approved the transfer of 51 percent of shares to the entity from the UK via Karandaaz, involving the conversion of Rs. 3.8 billion worth of endowments into an equity brick.

Previously established and registered with the Securities & Exchange Commission of Pakistan (SECP) as a public sector company in 2019, the shareholdings in the PCGC had been apportioned to the government and the State Bank of Pakistan (SBP).

The Central Bank had been allotted 39 percent of shares against the filed interest earnings ($2.9 billion) through the incorporation of the grant kitty into government treasury bills. The official documents suggest that the SBP had made the decision to hand the Pakistani company over to the UK.

The minutes of the meeting of the ECC read: “The SBP’s Financial Inclusion Programme Steering Committee headed by the SBP Governor, recommended in October 2019 that the PCGC was to be funded by a contribution from unspent amount of the DFID’s (now FCDO) grant out of its original grant given during the period from 2008 to 2020 as equity share of the DFID in the PCGC through Karandaaz”.

The SBP had declared in 2019 that the profit earned on the unexpended grant would be reinvested in the PCGC and that the Ministry of Finance’s investment of Rs. 300 million in 2010 would be considered the shares of the federal government.

The Ministry of Finance had initially opposed the central bank’s ruling to sell a public sector company for extra cash. As per details of the official documents, “The Finance Division is of the view that the MoU between the EAD, the SBP, and the DFID was a grant agreement. Grants are one-way transactions. They may be tied to specific utilization but are not refundable. If they are otherwise, they are not a grant”.


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The PCGC was declared a Development Finance Institution (DFI) in June 2019 in a move that enabled the government to invest in private sector projects to generate economic growth and curb employment woes. This nullified the SBP’s initial ruling to sell the company as a DFI can only be sold through a competitive process as dictated by the Privatization Ordinance 2000.

The recent decision to withdraw the summary of the ECC from the agenda of the federal cabinet has potentially saved the government from possible legal troubles. More details related to the future of the DFI are yet to be revealed.